Nursing Home Firm Eyes Ottawa County

February 29, 2008
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GRAND HAVEN — A Southfield company has proposed construction of a new nursing home near Grand Haven, as the state is about to consider a 21 percent increase in the number of nursing home beds allowed in Ottawa County.

The increase could spark a competition this spring for the remaining 167 beds that would be available under updated state regulations.

Southfield-based nursing home operator Ciena Healthcare Management is proposing to build a 167-bed facility at 14811 168th Ave., near the Grand Haven Memorial Airport, according to a letter of intent filed with Alliance for Health, which reviews proposals before they are presented to the Michigan Department of Community Health.

Proposed changes to the department’s Certificate of Need regulations set the number of nursing home beds allocated to Ottawa County at 1,060, and 893 beds are already in place, said Lody Zwarensteyn, executive director of Alliance for Health. The Ciena proposal would fulfill the entire new allocation.

The nursing home beds would be evaluated on a competitive basis, Zwarensteyn said, so that Ciena’s proposal would be stacked up against any others that may try to stake a claim to the additional beds.

“Now all the others out there will have the opportunity to come in. It’s a ‘speak now or forever hold your peace’ situation,” he said, noting that it would be years before bed allocations may be changed again.

Charlie VanderBroek, president of the nonprofit Resthaven Care Center in Holland, said he expects Ciena will have some competition for those beds.

“First, I would say are there others, probably, because this is 167 new beds,” said VanderBroek. “I don’t know what the timetable is, but probably we will see some other interest.”

Dave Herbel, president and CEO of the Michigan Association of Homes and Services for the Aging, the statewide group for nonprofit long-term care, is a member of a committee that has spent a year reviewing CON standards for nursing homes. As part of the review, the number of beds allowed in the state’s 83 counties is being revised.

The bed need in Ottawa County had been 874; under the new standards, that jumps to 1,060. The county currently has 893 beds.

“What we’re seeing now is the folks who are taking the strategy from a business perspective: ‘If there’s a bed need change in a particular area in Michigan, I want to be the first one in line,’” Herbel said.

“If you can sew up a market, particularly where there are advantageous demographics, those go pretty quick.”

The changes are expected to go before the CON Commission in March, said Andrea Moore, CON staff member. After the commission votes on the standards, they will be forwarded to a joint legislative committee, which has 45 days to consider them, she said.

Moore said the changes to bed needs by county are based on a formula that takes into account nursing home utilization and population projections.

Most West Michigan counties would see a reduction in the allocation of nursing home beds. Bed needs in Kent, Muskegon and Kalamazoo counties all would drop, leaving no room for construction of additional nursing home facilities. Other West Michigan counties are receiving increases in bed need that are too small to support an entire new facility.

“The only one that’s attractive to a developer probably would be Ottawa,” Zwarensteyn said.

According to Ciena’s letter of intent, construction of the 50,000-square-foot building would be under the auspices of Grand Haven Senior Leasing, a limited liability corporation set up on Feb. 7 with Ciena Healthcare Management owner Mohammad A. Qazi as resident agent. The building then would be leased by Grand Haven Care Center, another LLC which was established on Feb. 8, also with Qazi as resident agent. The lease would cost $8.98 million over five years.

“It’s just in the very, very beginning stages right now. We still have to go through approval with the state Certificate of Need approval,” said Tami Hunt, an executive assistant with Ciena.

According to its Web site, the for-profit Ciena manages 27 nursing homes in Michigan, 13 of them outside the Detroit area. The company oversees more than 2,900 nursing home beds.

In August, Ciena settled Medicare and Medicaid fraud allegations made by the state Attorney General and the U.S. District Attorney for the Eastern District of Michigan with a $1.25 million reimbursement and a comprehensive chain-wide corporate integrity agreement. The reimbursement was split between the state and federal governments.

Also involved in the settlement were Qazi, Ciena CFO Anis Khan and COO Denise Mahnke-Pugh, according to a press release from Attorney General Mike Cox. The investigation centered on three Ciena nursing homes in Detroit and one in Whitmore Lake. The five-year agreement is intended to improve care in all Ciena homes, and is expected to cost the company $500,000 per year.

In the settlement, Qazi, Khan and Mahnke-Pugh denied the allegations but agreed to settle to avoid litigation.

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